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Arkansas Hospitals Pinched Following Insurance Aftermath

2 min read

Some Arkansas hospitals are feeling the fallout from Arkansas Blue Cross & Blue Shield not receiving the premium increase it requested last fall.

If you recall, the state’s largest insurance provider asked the Arkansas Insurance Department to increase premiums for 2017 by 14.7 percent to cover the costs of its members in the “metallic” health insurance products. That includes the Medicaid expansion called Arkansas Works and individuals who buy insurance through the Affordable Care Act health insurance exchange.

The AID ultimately approved a 9.7 percent increase.

“That 5 percent [difference] represented a $60 million underfunding,” ABCBS spokeswoman Max Greenwood said.

She said ABCBS decided it would “absorb the risk for half of that shortfall.” The other half would come from hospitals and physicians through reduced payments for some services.

So starting Jan. 1, the carrier “reduced reimbursement for unscheduled outpatient services — so basically your emergency department — by 7 percent,” Greenwood cited as one example.

Arkansas Blue Cross & Blue Shield has about 225,000 people covered in its metallic plans.

Some hospitals escaped the reductions. The 29 critical access hospitals around the state didn’t see a reduction in payments from ABCBS, Greenwood said. Those hospitals include CrossRidge Community Hospital in Wynne and Stone County Medical Center.

Others, though, are feeling the sting of the reductions.

Stuart Hill, vice president and treasurer at Unity Health, said the reductions are estimated to be a $250,000 hit on the Searcy health care provider’s bottom line. He said that equates to about a 2 percent reduction in annual net income.

“It’s not as bad as it could be, but it’s still an impact,” Hill said. “It’s a quarter of a million dollars that I’ve got to now try to figure out how to cut costs somewhere or see how we can generate additional revenue somewhere else. It’s a challenge.”

Tadd Richert, CFO at CHI St. Vincent, said ABCBS reimbursement reductions have had a financial impact, but he declined to say how much.

And not all of CHI St. Vincent’s five hospitals in Arkansas were struck by reductions equally. Its hospital in Morrilton is a critical access hospital, so it wasn’t subject to the reduced payments.

“We’re going to have to continue to make cost reductions,” Richert said.

The reduction in fees shouldn’t be taken as a knock against the Affordable Care Act, Greenwood said. Arkansas has benefited from the ACA and about 300,000 Arkansans have health insurance when they previously didn’t.

“With any new program, there are going to be adjustments made,” Greenwood said. But “I don’t think that you can argue that this has not had a positive effect on the state.”

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